British American Tobacco Kenya (BAT Kenya) has announced a dividend payout of KSh50 per share, despite reporting a 19% decline in pre-tax profit for the financial year ending December 31, 2024. The company’s pre-tax profit fell to KSH 4.48 billion, down from KSh5.57 billion in the previous year, primarily due to increased financing costs.
The rise in financing costs is attributed to higher interest rates and foreign exchange losses, which have adversely affected the company’s profitability. Despite these challenges, BAT Kenya’s board has recommended the dividend payout, reflecting confidence in the company’s long-term prospects.
BAT Kenya’s Managing Director, Crispin Achola, acknowledged that the company faced multiple challenges in both its local and export markets.
“In Kenya, this was characterised by geopolitical tensions marked by prolonged civic demonstrations which interrupted our supply chain and trading activities, foreign exchange losses, rising interest rates, cost of living pressures on consumers, regulatory uncertainty, and a surge in illicit trade cigarettes to 37 per cent (third party research) by the end of the year,” he said.
“In our export markets, which contribute almost half of BAT Kenya’s turnover based on the company’s business model, significant regulatory changes in some markets adversely impacted consumer purchase dynamics leading to volume decline.”
In a statement, BAT Kenya, highlighted the company’s commitment to delivering value to its shareholders, even in a challenging economic environment. The dividend proposal is subject to approval at the upcoming Annual General Meeting.
“The Board of Directors has proposed a final dividend in respect of the financial year ended 31st December 2024 of Kshs 45 per share, to be recommended for approval by shareholders at the Annual General Meeting to be held on 25th June 2025.”
The company’s revenue remained relatively stable at KSh 25.72 billion, indicating resilience in its core operations. However, the increased financing costs have significantly impacted the bottom line. The cost of operations rose 4.4% to Ksh 18.4 billion.
“In the domestic market, business performance was unfavourably impacted by cost inflation, lower consumer purchasing power driving the downgrading to lower priced brands,” BAT added.
BAT Kenya incurred a finance cost of KSh829 million, driven by the appreciation of the Kenyan shilling against the US dollar. Additionally, the company faced an income tax expense of KSh2 billion, both of which contributed to a 19.5% decline in its profits.
BAT Kenya remitted KSh15.37 billion in indirect taxes to the government, including Excise Duty and Value Added Tax (VAT), underscoring its role as a key contributor to the country’s tax revenue.
BAT Kenya continues to focus on cost management and operational efficiency to navigate the current economic challenges. The company is also exploring opportunities to diversify its product portfolio to meet changing consumer preferences and regulatory requirements.
The proposed BAT Kenya dividend payout is expected to provide a return to shareholders and reinforce their confidence in the company’s future performance. BAT Kenya remains optimistic about its ability to adapt to the evolving market dynamics and maintain its position in the industry.
The company’s financial performance reflects the broader economic conditions affecting businesses in Kenya, including fluctuating interest rates and currency volatility. BAT Kenya’s strategic initiatives aim to mitigate these challenges and sustain growth in the coming years.
The proposed dividend is a positive signal of BAT Kenya’s commitment to shareholder value amidst a challenging operating environment. The dividend is expected to be paid on 25th of June 2025 to shareholders who will be on the firm’s register on 23rd of May 2025.
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